Killing debt is not a panacea for curing Third World poverty

Since I questioned the arguments for writing off Third World debt three weeks ago, I have become something of a pariah. I haven’t exactly been spat on in the street, but it comes as no surprise that feelings run high on this subject. Clearly I have made a wide circle of enemies on the subject, who have not been shy about excoriating me for suggesting that “debt forgiveness” is not necessarily the best way forward for either creditors or debtors.

I was invited on to BBC’s Business Breakfast on Monday (May 11) to defend this position opposite the redoubtable former Bishop of Birmingham, Hugh Montefiore and, since we were allowed only a couple of soundbites each, battle was hardly joined. This week, Christian Aid publishes Forever In Your Debt? on behalf of eight of the poorest countries of the world (which it calls P8), in order to lobby eight of the richest countries meeting in Birmingham (G8).

For all these reasons – and because it is a fantastically important issue for western economies and the companies within them that do business with those developing economies – I want to return to the subject to challenge the lobbyists’ position in rather more detail.

The thrust of Christian Aid’s argument is that the G8 (Britain, the US, Canada, France, Germany, Japan, Italy and Russia) have the power, money and responsibility to deliver debt relief which will make global poverty reduction targets a reality in the new millennium. And it backs its case with alarming statistics such as the 63 poorest countries in the world paying just under $80m every day servicing their debts, which is calculated to be the equivalent of enough healthcare for a year for 5 million people.

The question is whether such debt written off will lead to the money saved being re-invested in health and education. The short answer, on the record of many governments in developing economies, is that it will not.

Christian Aid’s selection of countries for P8 – Mozambique, Ethiopia, Tanzania, Malawi, Bangladesh, Nicaragua, Bolivia and Jamaica – has been widely criticised for not representing the poorest countries of the world at all. The Guardian’s harrowing reports on Niger on Monday, as part of its own campaign to have G8 address write-offs, partly bear this out. But I suppose it must be difficult to draw up a list of eight that isn’t exclusive in some way.

The point here, though, is that it is precisely in excluded examples of developing economies that some of the strongest counter-arguments to wholesale write-offs reside. Take The Sudan, racked by long-term civil war. There is one very straightforward reason that hundreds of thousands of people are starving in the south of that country: the north wants them to.

Anyone with a working knowledge of Sudanese history knows that when western colonialists arbitrarily carved up north-east Africa (for which Britain must accept its share of shame), north Sudan was left with sovereignty over a southern Sudan, whose peoples were essentially a mixture of east African tribes, who had Sharia law imposed upon them and were considered sub-human slaves. Relief aid has had a job on its hands getting past Khartoum.

Agricultural land in north Sudan is called the Bread Basket of Africa, so fertile is the so-called Black Cotton soil. The Sudan could feed its own peoples with ease. But it grows cotton instead as a cash crop for export. When it does grow sorghum, a maize-like grain, it exports it for further cash from Saudi Arabia and elsewhere – this gives rise to the sort of grotesque situation of the past decade, when imported grain from the efforts of Band Aid was being matched by exported grain from the domestic market.

Note also that one of the causes of the Sudanese civil war was the southern rebels’ justifiable fear that an oil pipeline from El Muglad to Port Sudan would be used to enrich the north at the terrible expense of the south. Oil companies such as Chevron had to give up on the development in frustration.

The Sudan, of course, is not in the P8. But my point is that such domestic political barbarity is replicated throughout the Third World. In the P8 list, Ethiopia is recovering from the ravages of the Mengistu regime, of which Pol Pot would have been proud; Bolivia is steeped in organised corruption and Jamaica has one of the most disgusting penal regimes on earth, inspiring London lawyers to work pro bono for the wretched prisoners of St Catherine’s, Kingston.

Be assured that none of this is an argument for leaving the poor of these countries to their own devices. The efforts of organisations such as Christian Aid to reach out to them are heroic. But this is no argument for giving up the one major political and economic leverage that the West has to exert power over these regimes – its financial muscle in the shape of historic loans.

Throw those away and you really are leaving the oppressed and the oppressors to their own devices. There may be a case for selective write-offs but, whatever the battering they receive, western banks and multinationals must not abandon the Third World wholesale to some of its own ghastly governments.

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